Layoffs are increasing demand for tech freelancers

IT turns to freelancers, consultants to fill project gaps, but it's no economic green shoot.

Demand for contract tech workers, whether they call themselves freelancers or consultants, is increasing, but the trend isn't a green shoot -- a signal of an economic recovery. It may be more an act of desperation by companies struggling to keep up with work in the face of staff cutbacks.

Two job sites that work use eBay-like features to match workers with employers, Elance., and oDesk Corp., have seen sharp increases in the number of employers that are hiring temporary workers from their sites.

Today, Elance averages 25,000 job postings a month from employers, up almost 50% from this time last year. And oDesk says it has seen job postings on its site increase by 100% percent over the past year to about 17,500 jobs.

As demand for IT freelancers or consultants grows, interest by employers in hiring permanent full-time and part-time employees is down. One tech hiring board, Dice.com, earlier this month, said it's postings have declined by about 45% since last year to 48,000 jobs. The Dice numbers are just another indication that the overall technology workforce continues to shrink.

This rising interest in tech contract help "is what we would expect to see right now," said Stephen Minton, an analyst at IDC. He added that the increased project-by-project hiring does not signal an improving economy.

IT managers aren't undertaking new projects, but still have as many projects as they did six months ago, but with fewer permanent staff, said Minton, who doesn't expect to see signs of an improving economy until the end of 2009.

Michael Axelrod, co-founder and president of e-Brilliance LLC, a Philadelphia provider of both IT services and contract consultants, says that over the last two months he has seen the number of "opportunities" - potential projects for his firm - increase by nearly 50%.

Companies are "being asked to do the same amount with less," Axelrod said. His firm is in most demand for infrastructure work, especially upgrading Exchange 2003 to Exchange 2007, and for server virtualization projects.

Axelrod said he is not having trouble finding experienced workers to complete the projects. "There is more talent now then there has been for long time," he said.

Axelrod said that e-Brilliance allows its clients to hire its contractors -- but there isn't much activity on that front now. "They still don't know what's going on with the economy - they don't know when it's going to turn fully," said Axelrod.

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